(Argus, 1.May.2019) — Peru reapproved a contract for UK-listed Tullow Oil to explore shallow-water block Z-64.
This is Tullow’s second chance with the block, nearly a year after its original contract was cancelled.
The 54,000-hectare block lies off the northern coastal department of Tumbes, where Canadian independent Frontera Energy operates the nearby 1,200 b/d block Z-1.
Z-64 is one of five blocks that Tullow was awarded in March 2018, with the contracts controversially published only a day after former president Pedro Pablo Kuczynski resigned. Congress pressured the new government to annul the contracts based on an energy ministry recommendation to reformat the citizen participation process. In May 2018 the contracts were revoked. The ministry approved new participation rules in January 2019.
Tullow is still waiting for the state to decide on the other four northern coast blocks.
The company could still run into problems with environmental groups and coastal communities pushing to establish the country’s first maritime protected area, the Grau Tropical Sea National Reserve.
The ombudsman´s office, a state agency that defends citizen rights, on 30 April demanded that Peruvian president Martin Vizcarra fulfill a pledge to create the protected area.
The office compares Peru to neighboring Chile, claiming that 25pc of Chile’s sea is protected, while in Peru only 0.5pc of the marine area is protected.
The Peruvian Hydrocarbons Society says the proposed protected area would alienate investors, affecting exploration blocks already awarded and others up for grabs.
Australia’s Karoon, which is partnered with Tullow in deepwater exploration block Z-38, has argued that the new reserve would keep it from moving ahead with an estimated $2.5bn investment on the block. Besides block Z-1, Peru has one other offshore production block, 7,550 b/d Z-2B, operated by Savia, a Colombian-South Korean group. Savia also operates Z-6, but it is not yet producing. There are three other offshore exploration blocks, Z-61, Z-62 and Z-63, operated by US independent Anadarko, which is the target of a takeover battle between Chevron and Occidental.
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